Cultural change: The ultimate discipline of business transformation?

Today, Anton Tremp took the time to talk with me about the dimensions of transformations. Anton is currently General Manager for a European technology group in Saudi Arabia. We talk about his tasks, operational and cultural challenges, leadership during situations of change and why cultural change is the ultimate discipline of transformation.

Anton, you’ve been in Saudi Arabia since 2016. What’s your role there?

In 2013 it was decided to build a factory here. It was opened in 2015. However, considerable difficulties were encountered during the initial phase.

Even today?

No, that’s why I’m here (laughs). But in 2016, the situation was quite different. Basically, a classic business transformation, because I had to bring a project, which was not working, to life. To make this happen, a fundamental cultural transformation was required.

Why?

Because there are big differences between the culture of a corporation dominated by western values and the local cultural mindset. In the Arab world, you have to be very flexible. It’s a challenging environment. Various socio-cultural elements have an impact on day-to-day business, which you need to understand first and then partly adapt for the local factory, driving it towards the western values of the parent company. This leads to culturally dominated tensions.

What exactly do you understand by the term Business Transformation? How do you distinguish change, transformation and transition?

A transition is nothing more than a transitional phase. It describes the period from a stage A to a stage B – the period in which something changes. This change does not happen by itself; it must be driven by those involved. And this guided process in the sense of change is a transformation.

Transformations have three dimensions: First, the strategic dimension; second, the structural and process dimension; and third, the cultural dimension. In a transformation, all three dimensions will have to be adapted interdependently.

A change can also take place on one dimension only. Processes, for example. The prerequisite here is no change in strategy or even cultural adaptation. In this case, it is only the process dimension, which is being adapted.

How to engage people in a transformation?

This is part of the cultural dimension – and the key to success. You can have the most brilliant strategy, powerful tools and highly efficient processes. If people don’t want to or are not able to change, nothing is gonna happen. The key to a successful transformation is always a psychological one.

Always?

If we are talking about large-scale transformations, in which all three dimensions are changed – yes. There is the famous quote: “Culture eats strategy for breakfast”. The dominant element is the cultural dimension. Many transformations have failed because of it. The cultural dimension is the most difficult and the slowest one – because it takes place at the social and psychological level.

To what extent is transformation rooted in your corporate values?

The understanding that the world around us is changing massively and rapidly is common and widely accepted. Everyone here has the awareness that there is a fundamental need for change.

Is transformation for you rather a project or a process?

In terms of approach, it is ultimately a project: you decide at a certain point in time that something has to be changed. At a later stage you will reach that goal, and the project is finished. If it is not completed, it becomes a continuous “muddling through” in which resources are wasted unnecessarily. That’s why a transformation is a project for me, which – potentially – can take several years. In such a case the transformation has to be integrated into the day-to-day business and minor adjustments have to be made continuously. But it always has a start date and an end date.

You have accompanied many transformations. What do you especially remember?

Once I was contacted because a German Group had bought a British entrepreneurial mid-size company and the post-merger integration was about to fail. The CEO of the British mid-size company was obviously annoyed by the nature of the integration attempts, which he experienced as an “overly formal” approach of the German parent company. In an evening after some beers, we made a bet: he said he would change the company in two to three months. I countered, that he will be still with the company in two to three months and would like to continue in his current role.

And? Who won the bet?

I won. The CEO remained in this position for another four years and then worked in another position for the German Group for additional six years before founding his own company. This example illustrates in a nice way that the cultural dimension of a transformation is always linked to the interpersonal cooperation.

The dominant element of a transformation is the cultural dimension. Many transformations have failed because of it.

Anton Tremp, General Manager in Saudi Arabia

From your point of view, what was necessary in this situation to get access to him, to convince him?

The basic rule is: “build relationship based on mutual trust”. That is the cornerstone. Because in every transformation there are always uncertainties, fears, questions or doubts – and people have to trust you. And that was also a central element in this case. We had a lot of in-depth discussions. It is always important to listen, to understand what the others are saying and sometimes even to anticipate what fears they may have, because these are often not expressed explicitly.

Do you have – besides your personal experience – methods or frameworks that you use for such conversations?

Normally, I conduct in-depth and structured conversations, which are also driven towards a certain goal. I need to understand what makes the other ‘tick’, what is he talking about. And on that level, I have to meet him and lead him in a specific direction.

A systemic approach is important for me. I work in the sense of System Dynamics. Depending on the situation, I also do this graphically and visualize all dependencies present in the respective environment. This helps a lot, for example, to recognize “vicious cycles” – or to see which factors or actors are influencing the system negatively or positively.

Which leadership style do you think is suitable in change situations?

That always depends on the situation and the team. Here in Saudi Arabia, I have chosen an approach based on transformational leadership, whereby I have strengthened the humanistic part even further and have strongly focused on social competencies. In a first phase, this approach triggered uncertainties. However, I was very transparent from the beginning. I have held management workshops on the subject and my management team has responded very well to it.

It has shown to me that even in an Arab country an approach that is strongly oriented towards social competencies works effectively and can therefore create a sustainable basis for more difficult, upcoming phases. Perhaps my approach was less participative than I would do it in Switzerland, but probably more than in Germany. An approach that involves people and creates a culture in which everyone feels taken seriously.

The basic problem in such transformation projects is always: I come from outside and for the others I have ‘no clues’.Therefore, in the initial phase I’m always somewhat outside the system. And consequently, I have to make sure that the knowledge and skills of those involved are used in an optimal way, such that everyone pulls in the same direction as me. If this does not succeed, the entire project will fail. And that’s exactly what I make transparent for employees and other stakeholders.

How do you balance transformation activities with day-to-day business?

That’s rather difficult. There are two dimensions to this. The personal and the employee’s point of view. Personally, in the first 18 months here in Saudi Arabia I worked somehow on two full-time jobs: the day-to-day business and the transformation project. In such a situation, a 70-80 hours week was not uncommon. From the employees’ point of view, day-to-day operations clearly have priority: you have to get orders, satisfy customers, execute projects, generate revenues. Therefore, I aim to use suitable resources to drive forward the transformation in parallel to the day-to-day business. It is therefore often difficult to find the right priorities and to balance between day-to-day business and transformation project.

In my opinion the operational business always has to come first, because: no transformation, however sophisticated, is of any use if the operational business is not successful. It is also always a question of the different subjects being addressed within the transformation project. How can the new solutions be embedded into day-to-day business? To what extent can these topics help to improve operational business in the short term? And with such an approach the priorities need to be adjusted and the way forward can be fine-tuned as needed.

As such an agile approach?

Yes, as already mentioned, it is about situational balance and continuous improvements, which can be implemented. Mutual trust is again a key element for determining, which new methods or processes should be implemented when and where. You can’t just introduce new processes when executing a large order: the risks would be far too big. You’ll have to apply ‘common sense’.

What resistances do you encounter in the transformation process?

This is also a cultural issue. I always aimed to bring the conflicts I had to deal with to the factual level as far as possible – especially when my counterparts were primarily focused on their own self-interest. As the formally responsible person, you need to ‘negotiate’ solutions and, occasionally even apply the formal authority to decide. But I always try to avoid using formal power as much as possible in order not to strain the relationship with my team unnecessarily.

As a result, the development work with my current management team went very well. It was possible to transform various former ‘lone warriors’ into a strong team, where everyone openly articulates encountered issues and contributes to jointly work out potential solutions.

Do you use external consultancy?

I don’t have such a high opinion of management consultants. In one of my engagements for a large corporate group, the consultants of a well-known consultancy created an excellent transformation concept, such that they were also engaged for the implementation, but they failed miserably in the implementation. The first project manager of the consulting firm was replaced after three months, the second one after three weeks. The ideas were very good, but the implementation was simply not adequate.

Consultants are typically focused on the conception, but not strong enough in implementation. This is not even meant as a negative statement, but consultants are often simply too far away from the practical implementation into everyday life, and therefore sometimes also the concepts show relevant weaknesses. Consultants can be a valuable resource in terms of support, but leadership and decisions must always remain with the management itself.

That brings me to my two core statements about transformations:

1. The best ideas are worthless as long as they are not successfully implemented.
2. You can never succeed in a transformation process ‘against the people’, but only ‘together with the people’.